Spain and Poland might have run afoul of European Union rules with their tax cuts on fuels aimed at curbing the economic impact of the Middle East war, the European Commission said Wednesday.Madrid launched a five-billion-euro ($5.8-billion) plan to reduce the value added tax (VAT) on fuel last month, and Warsaw similarly moved to slash VAT on petrol and diesel, as the Iran conflict sent energy prices soaring.
But the EU's rules on VAT do not envisage reductions for fossil fuels, commission spokeswoman Louise Bogey told a press conference in Brussels.
"We recommend rather to use reduction of excise duties," she said, adding that the EU's executive sent letters pointing that out to Madrid and Warsaw, and was waiting for a response.
Spain and Poland are among a number of European nations that have sought to contain energy costs with tax reductions, caps on fuel prices and other measures over the past month.
Oil and natural gas prices dropped sharply Wednesday after the United States and Iran agreed to a two-week ceasefire that sets terms to reopen the vital Strait of Hormuz.
Under an EU directive to harmonise taxation across the 27-nation bloc, VAT cannot be lower than 15 percent, with exceptions for some categories of goods and services, but not fuels.
